Wyden, Merkley split votes on financial rescue

Rick Bowmer/APUnlike this photo from November, Oregon senators weren't holding hands Thursday when the Senate voted to release $350 billion to help financial institutions. Merkley voted to allow the money to be spent while Wyden voted against it.

WASHINGTON -- Oregon's Democratic senators Ron Wyden and Jeff Merkley were on opposite sides of a major economic issue Thursday as Wyden voted to deny the federal government $350 billion to help stabilize a tottering economy while Merkley voted for it.

The division came as the Senate considered a Republican-sponsored resolution to deny releasing the second half of the $700 billion rescue package approved last fall. The Troubled Asset Relief Program, or TARP, has come under withering criticism by lawmakers from both parties who said the money was misspent and failed to achieve its primary purpose -- helping homeowners avoid foreclosure.

Anger over how the first $350 billion was used spilled across party lines, as lawmakers of all ideologies sharply criticized the Bush Administration's decision to funnel much of the money directly to banks while not demanding a full accounting of how those funds were used.

Both houses debated Obama's call to release another $350 billion from the financial bailout package, but the vote that mattered most was in the Senate. Despite bipartisan anger over the Bush administration's handling of the program to date, Democratic allies of the incoming president prevailed on a 52-42 roll call. The money will be available in less than two weeks, at a time when there is fresh evidence of shakiness among banks.

The vote followed a commitment by Obama to use as much as $100 billion of the funds to help homeowners facing foreclosure proceedings.

Wyden and Merkley were among those unsatisfied with the program. Wyden voted against the original bill and backed that vote with another on Thursday to block release of the second installment. Wyden was one of eight Democrats voting to deny the funds.

Wyden said in a statement that he was not convinced the reforms proposed by the Obama administration would solve the serious problems with the program.

"While I certainly trust President-Elect Obama with these funds more than the Bush administration, what was horrendous policy before the election is horrendous policy after the election,'' Wyden said.

"Whether we have a Democrat or Republican in the White House, Congress has a sacred obligation to demand accountability, to write laws with some teeth in them, and to cease being a patsy to the Executive Branch. Compensating -- with hundreds of billions of taxpayer dollars -- the very investment bankers who took these outrageous credit risks is no way to restore confidence in our markets or the federal government,'' he said.

Merkley savagely criticized the program during his campaign against incumbent Republican Gordon Smith and some analysts said it helped him win the election.

But Merkley said he voted to release the funds because the incoming Obama administration promised -- in words and on paper -- to dedicate between $50 billion and $100 billion to help struggling homeowners stay in their homes. Merkley said he expressed his concerns directly to Obama's incoming chief of staff Rahm Emanuel and senior economic advisor Larry Summers.

"I have roundly criticized the first $350 billion ... because it didn't attack the challenge of families facing foreclosure,'' Merkley said in an interview after the vote.

"So I have been immersed in the last several days talking with Rahm Emanuel, Larry Summers and Barack Obama on Tuesday ... trying to make sure this package will contain very vigorous effort to attack the foreclosure problem,'' he said.

That promise was realized Thursday when Summers released a letter promising to spend at least $50 billion to buy and rework distressed mortgages and other actions so that people can remain in their homes.

"The Obama Administration will commit substantial resources of $50 billion to $100 billion to a sweeping effort to address the foreclosure crisis,'' Summer said in his letter.

"We will implement smart, aggressive policies to reduce the number of preventable foreclosures by helping to reduce mortgage payments for economically stressed but responsible homeowners,'' the letter said.

Obama acknowledged the anger as well.

"I know this wasn't an easy vote because of the frustration so many of us share about how the first half of this plan was implemented,'' he said in a statement after the vote.

"There was too little transparency and accountability, and it didn't do enough to get credit where it's needed most -- small businesses and families struggling to keep their jobs and make ends meet. Now my pledge is to change the way this plan is implemented and keep faith with the American tax payer by placing strict conditions on CEO pay and providing more loans to small businesses, more transparency so that taxpayers can see where their money is spent, and more sensible regulations that will protect consumers, investors, and businesses,'' he said.

With the promise to attack foreclosures, Merkley said some of the 25,771 households in Oregon in risk of losing their home might be helped.

With Senate action completed, the money is expected to be released in two weeks.

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